Microsoft challenged AWS today by making its infrastructure–as-a-service (IaaS) offering generally available and committing to match AWS for the price of storage and compute in the cloud.

The Redmond-based software giant said its IaaS offering will allow businesses to migrate virtual machines running on Hyper-V from their internal datacentre to Windows Azure public cloud.

Microsoft has offered the service since last year, but today's general availability means the introduction of monthly SLAs guaranteeing 99.95 percent availability for the service and 24/7 support, as well as the ability to run VMs on Azure servers with 28GB and 56GB of memory, compared to the previous limit of 14GB.

In practice Michael Newberry, Windows Azure lead for Microsoft UK, said Microsoft expected the availability of SLAs would mean companies would begin migrating existing production workloads from their datacentres to Azure, rather than just using Azure infrastructure as a test and development platform – which has mainly been the case to date.

"We want to make to make our cloud OS the place where you can take enterprise applications, both new and existing ones," he said.

Azure offers a range of platform-as-a-service (PaaS) offerings, including deploying websites and web apps and hosting SQL database instances on Azure. Newberry said the difference between PaaS and Iaas is the former is used to develop new applications whereas IaaS provides additional capacity to run existing applications currently being run on-premise inhouse.

"It's for their existing application base where they want to expand their datacentre out into the cloud.

"We're talking about taking a SQL Server app that you might have been running for years, wrapping that up within a VM and putting that into Azure."

Virtual machine images are stored in the Virtual Hard Disk (VHD) format, allowing VMs running on-premise to move to Azure's infrastructure cloud. Live migration of VMs to Azure is not supported.

Workloads running on versions of Windows Server from 2008 R2 onwards or SQL Server can be run on Azure in a VM. On the Linux front it can run Canonical Ubuntu, SUSE Linux OpenSUSE and Enterprise Linux Server, and the CentOS clone of Red Hat Enterprise Linux. Red Hat distros are not currently supported.

Windows Azure Virtual Network allows Microsoft to link through the corporate firewall to an organisation's internal network, allowing virtual machines running on the internal datacentre and Azure cloud using a single network. The virtual network provides control over configuration of IP addresses, routing tables and security policies. Tools like Microsoft System Center 2012 can then be used to manage those VMs as one centralised infrastructure.

Taking on AWS

Microsoft announced Azure as a PaaS offering in 2009 but entered the IaaS market in June last year when it first made IaaS services available in preview. Microsoft has had about 1.4m VMs spun up in Azure's infrastructure services since the preview was announced. However compared to AWS, the market leader for IaaS that entered the space in 2006, Microsoft is something of a latecomer.

To bolster Microsoft's chances of challenging AWS in the IaaS market Microsoft made a pledge that from today it would price match AWS for commodity services like compute, storage and network bandwidth for VMs.

"We want customers to be able to take that [the price] for granted so we can talk about which is the best cloud platform for a particular workload," said Newberry.

"The goal with our cloud OS strategy is to be able to make it the modern platform for device cloud apps, a consistent platform across on-premise, service provider and cloud so that people can develop and deploy their apps back and forth as they want, with common identity, integrated virtualisation and integration with the rest of the Microsoft stack," said Newberry.

Dan Scarfe, CEO of development house and Microsoft Gold partner Dot Net Solutions, said that while AWS may have a longer history offering IaaS through its EC2 compute and S3 storage services, the market is still a very long way from being sewn up.

"If you look at the overall public cloud spend in terms of overall IT spend it's still a rounding error, so I think everything is up for grabs," he said.

The greater market opportunity for Azure might lay in the legacy-application orientated IaaS market rather than PaaS with its focus on new application deployment, said Scarfe.

"IaaS feels like a larger addressable market. If you look at IT spend between legacy applications and new applications only 15 percent is spent on creating new applications," he said.

However Microsoft IaaS offerings, as they currently stand, are little threat to AWS, said Gartner research director Tiny Haynes said: "The IaaS marketplace is dominated by AWS, with an estimated two thirds market share.

"Microsoft will have a difficult challenge to get anywhere near AWS's dominance of the market over the next few years and will have to compete with other established players such as Verizon Terremark, CSC, Dimension Data and Savvis who already have strong customer bases.

"Based on Gartner's inquiry volume Azure has yet to find a foothold in the IaaS market, therefore they need to follow Amazon's lead until they can find a differentiation that is accepted and, more importantly, understood by the market. Therefore Microsoft is not currently seen as a threat to AWS, nor will it be for the near term."

Laurent Lachal, Ovum software group on cloud computing research, believes the significant growth expected from the IaaS market could sustain several major competitors to AWS "Will there be a significant overnight impact on AWS? No, because the market for IaaS offerings is growing I think there's space for all of them to grow, partly at the expense of one another but also partly not.

"AWS has been very good at supporting Microsoft technology in the past few years but for Microsoft shops Azure would be the number one stop and the fact they now have IaaS capabilities make it even more attractive."

He added the PaaS-focused players like Microsoft and Google had been slower to expand into the IaaS market than AWS had been to extend from IaaS into PaaS.